RBI MPC maintains repo rate at 5.25% amid global risks

The Reserve Bank of India (RBI) Monetary Policy Committee (MPC) on Wednesday decided to keep the benchmark policy repo rate unchanged at 5.25%, maintaining a cautious stance as global uncertainties, particularly geopolitical tensions, continue to pose risks to inflation and growth.The RBI announced its monetary policy decision on April 8, 2026, following the first bi-monthly MPC meeting for FY27 held from April 6 to April 8 under the leadership of Governor Sanjay Malhotra.
Announcing the decision, Governor Malhotra said the Standing Deposit Facility (SDF) rate remains at 5%, while the Marginal Standing Facility (MSF) rate stands at 5.5%. The rate-setting panel also retained its policy stance at ‘Neutral’.Governor Malhotra highlighted that domestic economic activity continues to exhibit resilience. “High-frequency indicators up to February point to continued strong momentum in economic activity,” he said, adding that growth impulses remain supported by robust private consumption and sustained investment demand.He noted that business expectations remain optimistic, with rural demand staying firm. Agricultural prospects are supported by healthy reservoir levels, while private consumption is expected to be driven by discretionary spending.Urban consumption is also likely to strengthen further, aided by GST rationalisation and a buoyant services sector, he added.

#WATCH | RBI Governor Sanjay Malhotra says, "The Monetary Policy Committee met on 6th, 7th and briefly today in the morning to deliberate and decide on the policy repo rate. After a detailed assessment of the evolving macroeconomic and financial developments and the outlook, the… https://t.co/2RCdmS3YEO pic.twitter.com/vrFlBCnX85

— ANI (@ANI) April 8, 2026

External Risks Loom Large
The MPC flagged rising global risks, particularly due to ongoing geopolitical tensions. The April policy meeting came against the backdrop of heightened tensions due to the US-Iran conflict in the Middle East, which has persisted for over a month, triggering a sharp surge in crude oil prices and contributing to the depreciation of the rupee, with wider implications for macroeconomic variables and financial markets.Malhotra expressed concern that the intensity and duration of conflicts, including disruptions in the Strait of Hormuz, could impact both inflation and growth outlooks.“Elevated crude oil prices could increase imported inflation and widen the current account deficit,” he said. Additionally, weaker global growth prospects may dampen external demand and reduce remittance flows.In a recent development, the United States and Iran have agreed to a temporary two-week ceasefire, which is expected to pause hostilities and may ease pressure on global energy markets, including the reopening of the Strait of Hormuz.
GDP Outlook and Policy Support
As per the new GDP series, India’s real GDP growth for the previous year is estimated at 7.6%, the governor said. However, disruptions in key global supply routes could weigh on growth in the current year.He added that the government has taken proactive measures to ensure the supply of critical inputs across sectors to minimise the impact of supply chain disruptions.The RBI noted that it had already reduced the repo rate by a cumulative 125 basis points since February 2025. In its previous policy, the central bank had projected economic activity to remain resilient in FY27, raising Q1FY27 GDP growth forecast to 6.9% from 6.7%, and Q2FY27 growth to 7% from 6.8%. Inflation projections were also revised, with Q1FY27 estimates at 4.0% and Q2FY27 at 4.2%.

#WATCH | RBI Governor Sanjay Malhotra says, "The real GDP growth for last year is estimated at 7.6%. This corroborates the underlying strong momentum in economic activity supported by robust consumption and investment amidst supportive policy measures, ongoing structural reforms… pic.twitter.com/PI5I1tq3mn

— ANI (@ANI) April 8, 2026

Meanwhile,the central bank remains optimistic about the investment cycle, with a revival in private sector investment expected to sustain. This is supported by high capacity utilisation, strong credit growth, and a stable financial environment.Overall, the RBI’s decision to hold rates reflects a balanced approach—supporting growth while remaining vigilant about inflationary pressures stemming from global developments. Markets will closely monitor the central bank’s evolving growth and inflation outlook for cues on future policy direction.

(Business Correspondent)